How Does Oil Affect the Market and Online Forex Trading?

Crude oil directly impacts the Canadian dollar. So entire online forex trading strategies can be based on Canadian dollar crosses, and especially on USDCAD.

Online Forex Trading of USDCAD

USDCAD is a nice pair to trade. All wise traders who trade this pair, pay close attention to crude oil trends. And to some extend, to the US dollar. However, crude oil itself is the main driving force. And because it’s a highly technical market. USDCAD being strongly and inversely correlated to crude oil, it tends to also exhibit strong adherence to technical analysis. Technical analysis doesn’t make it easy to predict either one of these markets. But basic tools such as LSS support and resistance levels seem to work quite well. Trading USDCAD is different to other forex strategies, in that the trader cannot afford to ignore the related commodity. There are pairs out there that are not strongly correlated to anything else. And even gold, is not as strongly correlated to AUDUSD in the near term. But USDCAD and crude oil are strongly correlated. And is a very useful idea in online forex trading. As commodity pairs produce more solid price moves than other pairs.

How Crude Oil Impacts the Entire Market Across Online Forex Trading?

Other currency pairs are impacted to some degree by the Canadian dollar, or crude oil itself. But fundamentally, all oil importing and exporting countries are impacted. Russia and Canada are only two of these countries. Crude oil also impacts the US dollar through complicated, indirect ways, since the stock market itself is impacted. Generally, crude oil prices of around $40 are regarded as cheap by the market and the economy. And stock market movements tend to correlate with crude oil price, all the way up to around $60- $70. Then, at levels of $100 or more, the stock market regards crude oil as becoming or already being too expensive. And a negative correlation develops. This peculiar reaction of the stock market affects different currency pairs, in different ways. But the market as a whole also matters. When stocks are cheaper than some particular currencies, they are bound to attract more foreign investor money. And the reverse is also true. Online forex trading is really a global game, part of the greater financial markets. And the goal is to detect the next discount. Where some investor or country gets a better deal. Crude oil does impact stocks, and stocks impact some currencies. Traders can learn forex trading this way, and focus on the week to week and month to month trends.

Crude Oil is Slowly Becoming Redundant

Unlike gold, which is impossible to make synthetically, and has unique applications. Crude oil is not unique, and is slowly becoming redundant. Therefore its impact on the stock market, is expected to weaken over the coming decades. The correlation to the Canadian dollar is expected to last for many years. Unless other oil reserves around the world become cheaper to tap. For now however, things are unlikely to change overnight. So traders can safely trade upon these concepts.

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